Smaller purchases are going on the card

Lisa Napoli May 2, 2007

Smaller purchases are going on the card

Lisa Napoli May 2, 2007

KAI RYSSDAL: MasterCard’s having the kind of run you usually see only with oil companies. Or with Google, maybe.

MasterCard announced this morning quarterly profits jumped 70 percent over this time last year. We used our cards 16 percent more for a total balance due of $509 billion. For just three months.

But you might recall economists have been worried about a slide in consumer spending. So we asked Marketplace’s Lisa Napoli have a look.

LISA NAPOLI: The government may see a spending slowdown, but MasterCard said on its earning call this morning that it doesn’t.

For that, you can thank what the industry calls micro-payments. Meaning you aren’t the only one using plastic to pay for that coffee or the fast food.

Analyst Anarag Rana of Key Bank Capital Markets says the card industry is reaping the benefits of the push to go cashless for small purchases.

ANARAG RANA: These guys have an initiative to penetrate the sub-$20 transaction market. That marketplace that was sort of insulated from, you know, card-based payments for some time.

And it’s not all about racking up credit card debt, either.

David Robertson is publisher of the Nilson Report, which analyzes the card industry.

DAVID ROBERTSON: What is happening in the United States is the great use of the debit card. We’re now a debit card country more than a credit card country.

Prepaid cards are another growing market for MasterCard. Robertson says another reason the company’s raking in the dough is developing markets like Asia, Africa and Latin America are increasingly embracing plastic money.

ROBERTSON: There’s also a cache in many developing markets. People want to use plastic payments to identify themselves as being part of the larger world economy.

Robertson says that in just a couple of years, plastic will overtake cash and checks as the currency of choice around the world. In the meantime, MasterCard’s stock has tripled since the company went public just a year ago.

In Los Angeles, I’m Lisa Napoli for Marketplace.

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